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SBJ/February 13-19, 2012/Olympics
NBC Olympics ad sales blow past Beijing
Published February 13, 2012, Page 1
The company, which has benefited from economic stability and robust interest from Olympic sponsors, has already reset its final sales goal in advance of the Summer Games. The early success is significant for NBC, which lost more than $200 million on the 2010 Vancouver Games and faced questions about whether or not it overpaid the International Olympic Committee for the rights to the 2010 and 2012 Games. NBC paid $820 million for the 2010 Olympics and will pay $1.18 billion for the 2012 London Olympics.
“The prior two Olympics we were facing headwinds or tailwinds from the recession,” said Seth Winter, executive vice president, NBC Sports Group Sales and Marketing. “We are exceptionally far ahead of any pace I can recall before. The original goal that we had for London is a goal we’ve exceeded substantially.”
Winter said NBC has surpassed its national sales total for Beijing, which was reportedly $850 million, but declined to discuss the average costs of advertising buys or the network’s ratings guarantee. Sources said the total sales have surpassed $900 million.
The Beijing Games averaged a 16.2 Nielsen rating and 27.7 million viewers over 17 prime-time broadcasts. Ad buyers expect the London Games to deliver an equally sizable audience, but they expect it to be spread across more platforms since NBC will be offering live digital streams of events and won’t have a favorable time zone that allows swimming events to be aired live in prime time.
“Like Beijing, London is an appealing host for the Olympics,” said Sam Sussman, senior vice president and director at Starcom Worldwide. “It presents a little more challenges from a time-zone standpoint. Obviously, NBC leadership is taking a different approach in terms of making the Olympics available live, which is a plus given the explosion of the role of digital and social (media) in the Olympics. It will have an impact. The hope is people will consume more of it. But people will be consuming it differently.”
The London Games run July 27 through Aug. 12, and NBC plans to offer 275 hours of Olympic programming daily. Winter said that NBC is almost done with what it calls “sponsorship sales” to USOC and IOC partners and will move to the scatter market soon.
“They’re not going to sell out of inventory because there are so many hours, especially when you add the digital and live streaming, but they’re going to hold their line with price for good reason,” said Jeremy Carey, U.S. director of Optimum Sports. “There’s a lot of demand out there. There’s not a ton of original programming in the summer in the marketplace, and they’re in pretty good shape.”
For the first time, NBC is not selling digital advertising as a standalone buy for the Olympics. Instead, it is packaging its TV and digital media buys together, requiring companies to buy a certain amount of TV advertising to get digital inventory.
“Those advertisers that participate across multiple platforms have far better branding and recall metrics,” Winter said in explaining the combined sales decision.
NBC succeeded in getting strong support in several key categories. It sold out the automotive category early by signing U.S. Olympic Committee sponsor BMW to an exclusive deal in the foreign automotive category and General Motors to an exclusive deal in the domestic automotive category.
It also did well in the financial services category. For the first time, the network partnered with the USOC to sell joint sponsorship and advertising deals in the retail banking, online brokerage and wealth management category. The duo sold sponsorship and exclusive media packages to Citi and TD Ameritrade in the first two categories, and Winter said he’s optimistic that they will find a wealth management partner before the Olympics, as well.
Panasonic, a member of the IOC’s The Olympic Partner program (TOP), is back as an advertiser for the first time in several Olympics. The company signed on as the presenting sponsor of NBC’s 3-D broadcast of the Games. The company also will advertise during the Games. It opted not to advertise during the 2008 Olympics and later raised questions about whether or not its competitor, Vizio, ambushed it during the Games with a commercial featuring a diver.
“Panasonic was heavily segmented in the past,” said Betty Noonan, vice president of marketing at Panasonic Corp., North America. “Leveraging the Olympics at a time when the company is pushing to become more global makes sense. The Olympics is strategically important because Panasonic at the end of the day makes some of the best products in the world, so there is no better venue to associate high-performance athletes with our high-performance products.”
While most Olympic partners have bought time on NBC, there are several Olympic sponsors that have opted not to advertise. Acer, an IOC sponsor since 2009, has not bought any time on the network. It didn’t make a buy during the Vancouver Games, either.
Winter said he hopes that NBC will be able to find another computer company interested in buying time.
“That category has tremendous upside because it’s a healthy category and because of the back-to-school window,” he said. “Apple has a tendency to spend closer in (to events) rather than farther out. We hope they come in at the end and make an investment.”
Allstate, the USOC’s official insurance sponsor, and Hilton, the USOC’s official hotel sponsor, also opted not to buy advertising on NBC. Winter said their decisions not to buy haven’t been an issue because competitors in the category already have bought time or will buy time during the broadcasts. Both sponsors advertised on the network during previous Olympics.
“We believe firmly that if you’re a rings holder you should be investing in the Games,” Winter said. “If you’re buying the (Olympic) rings and no one knows you own them, then why are you investing in the Games?”
Though the collaborative sales effort with the USOC helped bring on two new advertisers, Winter said he’d like to see a system develop where IOC and USOC sponsors have to commit to advertising as part of their sponsorships. He pointed to NBC’s relationship with the NHL as an example of the structure he’d like to see for Olympic sponsorships. New sponsors to the NHL sign media commitments as part of their sponsorship agreements.
“Culturally and philosophically, we’ve made a lot of progress. But practically, we have room to grow with each other,” Winter said, adding that NBC is already in discussions with the USOC about collaborating on sponsorship and ad sales for the 2014 and 2016 Games. “Anyone who secures the rings, a TOP sponsor or a domestic sponsor, needs to recognize the investment we make in rights (fees).”
The Marketing Arm’s Mary O’Connor, who works with BP, AT&T and Hilton Hotels, said it doesn’t make sense for every sponsor to advertise during the Olympics, especially not at a time when NBC is bundling its TV and digital media buys.
“If a partner is going to play in the Olympic space and their end goal is to reach a consumer audience, then they should most definitely play on NBC in the 17 days,” O’Connor said. “But at the end of the day, you can’t fault a brand for doing something that’s smart for their business, and sometimes television doesn’t provide the return on investment a sponsor is looking for.”